(CNET.com) -- Home-theater-in-a-box systems (HTIBs) provide a turnkey surround sound solution on the cheap. But with a few exceptions--usually large, bulky component-based systems--they're generally not known for their flexibility or wealth of features.

And that's why the JVC TH-L1 is such a breath of fresh air. The diminutive HTIB allows for switching between up to three AV sources (two of which can be HD sources up to 1080p) and offers a USB port and iPod interface.

And while it's up to you to supply a DVD player (unlike many HTIBs, it's not built in), the TH-L1 retails for under $300.

Separating itself even more from the conventional HTIB lineup is the TH-L1's design -- the receiver itself is impressively tiny--and much like the current-generation gaming consoles, it stands vertically.

Measuring at 10.5 by 4.5 by 9.5 inches, the telephone-book-size TH-L1 will barely take up any real estate in your entertainment center. Its black-and-dark-silver trim will also blend in nicely with most modern LCD and plasma displays. Each of the five cubed satellite speakers measure in at 4 by 4 by 4 inches and match the receiver's color scheme with a dark silver outer casing and black mesh grilles--even the subwoofer shares the same stylistic rendering.

In addition to its small size, the TH-L1's other big advantage is its better-than-average (for a bargain-priced HTIB) connectivity suite. The unit's back panel offers two HDMI inputs, two component video inputs, two S-Video and composite inputs, and corresponding outs for each. If you're not routing audio via HDMI, you can choose optical or coaxial digital (one input each), or two stereo RCA inputs.

Alas, despite all those input choices, the system configuration makes you choose just two -- say, an Xbox 360 via HDMI and an HD cable box on component. (That said, you can expand the TH-L1's HDMI capacity by investing in an HDMI switcher -- many are available for less than $100). The third AV source is locked to the front panel inputs (S-Video or composite video, stereo or optical coaxial audio). The fourth and fifth input choices are the USB port and iPod interfaces, respectively.

The presence of such a full range of inputs is impressive, but -- at this price point--you're not going to get the full range of high-end features. The biggest disappointment is the lack of any sort of video upconversion, including analog-to-digital video conversion. That means all video is passthrough only -- so you'll need a corresponding output cable for every interface you use. In other words, when you switch from an HDMI to a component source, you'll need to switch from the HDMI to component input on your TV.

Of course, the JVC's included remote can be programmed to control other devices, so it can theoretically handling your TV-input toggling. But we found it to be a bit cluttered -- the overall layout seems to lack any logical sense of order. Those aforementioned control keys for third-party devices -- useless to the TH-L1 itself--take up a large amount of space on the remote's face. The five input selectors aren't grouped together and the unconventional location of the volume buttons had us scratching our heads. As usual, you'll probably be better off investing in a universal remote to solve such annoyances.

The aforementioned USB port on the front of the unit allows for quick access to media files on a flash drive or any other USB-capable device. This input is controlled via an onscreen interface available whenever the receiver is in USB or iPod mode. Simply attach the device, switch the input mode to USB Memory, and you're ready to start playing any of the supported file types: MP3, WMA, and WAV for audio; JPEG for images; and MPG or ASF for video.

Unfortunately, there is a slight hiccup in the playback functionality of these file types. For some reason, you must manually select which type of media you'll be playing off your USB device by going into the setup screen embedded inside the onscreen display. You must choose "audio," "video," or "still image," and then go back to the contents of your drive. It's quite annoying and we don't understand why every supported file type isn't readily playable from the same screen. One feature we did like was the ID3 tag (for MP3s) and file information scrolling across the TH-L1's display.

Don't Miss

iPod audio and video playback is a little less painful--use the included iPod interface cable and attach it to the port on the front of the TH-L1, then switch to iPod mode. (While connected, the unit can charge your iPod as well.) Similar to other devices that support iPod playback, the range of your remote control will be quite limited. You'll only be pausing and advancing tracks--switching artists will require you to manually navigate through your iPod. Playback of music and video worked on our older 80GB iPod, but the 2007 lineup will probably be limited just to audio (thank Apple for that shortfall--not JVC).

As mentioned, video connections are passthrough only, so you'll get exactly the same signal as if the video source was connected directly to your TV. On the audio side, the 5.1 system has built-in support for Pro Logic II, Dolby Digital, and DTS encoding. Sound performance was a little better than we had initially expected. While testing with the Blu-ray version of The Corpse Bride, we were satisfied with the distinct channel separation and overall range of the speakers.

The subwoofer, however, fails to make its presence felt; it seems underpowered. Danny Elfman's score filled up our 22-by-14-foot room nicely when the volume was raised to just below max -- but ask it to fill something a little bigger and you may be disappointed. You do have the option of adjusting the individual volume output for each speaker in addition to a bevy of surround sound presets. In other words, the TH-L1 is probably best suited for smaller rooms -- anything from a college dorm to a small entertainment room or den.

In our final analysis, if you can look past a few minor annoyances, the TH-L1 truly offers a very generous amount of features and inputs at an affordable price. We'd love to see a step-up model with support for more AV sources, as well as some video upconversion options. But for anyone who's pressed for space and is looking to switch between two or three game consoles, DVD players, or cable/satellite boxes and get some decent surround sound, the HD-capable TH-L1 is a pretty great option -- especially when you consider the oh-so-affordable price.E-mail to a friend